Business Department

Interactive Activity in BASIMAC (2nd Semester A.Y 2023-2024)

Name of Student: Juan Dela Cruz
Class Schedule: FRIDAY 7AM-10AM
Section Code: 257
Date:

INSTRUCTIONS: READ THE DILEMMA AND HIGHLIGHT THE APPROPRIATE ANSWER.

Dilemma: The Philippine economy has been experiencing high inflation over the past
year. As an economic advisor to the president, you need to develop policy
recommendations to address rising inflation. Before making recommendations, you
want to test the president's team's understanding of inflation concepts.

1. Which of the following is NOT a main cause of inflation?

a) Rising input costs
b) Excessive money printing
c) Falling unemployment
d) Rising aggregate demand

2. Cost-push inflation occurs when:

a) Consumers spend too much, driving up prices
b) Companies raise wages, driving up production costs
c) Natural disasters constrain supply
d) The government prints too much money

3. Which group benefits from unexpected inflation?

a) Creditors
b) People on fixed incomes
c) Savers
d) Borrowers

4. Currency demonetization is a process where:

a) A currency loses status as legal tender
b) More currency gets printed
c) Interest rates are lowered
d) A currency becomes more valuable

5. What is a potential risk of printing money to pay government debts?

a) Higher GDP
b) Falling exchange rates
c) Boosted exports
d) Hyperinflation

6. Which policy directly controls prices to curb inflation?

a) Lowering taxes
SAINT PAUL SCHOOL OF PROFESSIONAL STUDIES (formerly Saint Paul School of Business and Law)
Campetic Road, Palo, 6501 Leyte, Philippines • Telephone +63 53 323 7778 • Fax +63 53 323 4402 • www.spsps.edu.ph
b) Open market operations
c) Wage and price controls
d) Running a budget surplus

7. A wage-price spiral leads to:

a) Falling wages and prices
b) Lower inflation
c) Higher production
d) Perpetual inflation

8. Which approach persuades banks to tighten lending standards?

a) Currency demonetization
b) Moral suasion
c) Lowering bank reserve requirements
d) Printing more money

9. Fiscal policy to control inflation may involve:

a) Cutting government spending
b) Lowering trade barriers
c) Expanding the money supply
d) Reducing sales taxes

10. Rapid, uncontrolled inflation is known as:

a) Deflation
b) Stagflation
c) Hyperinflation
d) Demand-pull inflation

SAINT PAUL SCHOOL OF PROFESSIONAL STUDIES (formerly Saint Paul School of Business and Law)
Campetic Road, Palo, 6501 Leyte, Philippines • Telephone +63 53 323 7778 • Fax +63 53 323 4402 • www.spsps.edu.ph